A study conducted by the World Bank/ Bangladesh Institute of Development Studies showed that the Grameen Bank not only reduced poverty and improved the welfare of participating households, but also enhanced the household’s capacity to sustain their gains over time. This was accompanied by an increased caloric intake and better nutritional status of children in households of Grameen Bank participants (cited by Hashemi and Morshed, 1997). It was also found that women’s credit had a large and statistically significant impact on measures of the health of both boys and girls. Credit provided to men had no statistically significant impact. A 10% increase in (latent) credit provided to females increases the arm circumference of their daughters by 6.3%, twice the increase that would be expected from a similar proportionate increase in credit provided to men. Female credit also has a significant, positive but somewhat smaller effect on the arm circumference of sons. (Pitt et al, forthcoming.)

In a review of micro credit programmes provided by BRAC in Bangladesh, nutritional indicators also seemed to improve where microfinance institutions have been working. Results suggested a significant decrease in severe malnutrition closely associated with the length of BRAC membership—though disentangling the contribution of the microfinance services from the other BRAC interventions (particularly the functional education component) has not been attempted (Chowdhury and Bhuiya, 1998, Wright, 2000). Further evidence from Bangladesh showed the positive impact between children’s nutritional status and women’s credit and statistically significant impact on height and arm circumference, and men’s credit had a positive impact on girl’s body mass index, but not on boys (Khandker, 1998)

Similarly programmes were found to be successful in Indonesia. The women who received the loans increased their income substantially, improved their families’ nutrition and faithfully repaid their loans. They also had higher aspirations for their children’s education and were more likely to reduce fertility (Panjaitan-Drioadisuryo et al, 1999).